Which mortgage rules are changing in 2019?

It’s hard to make the right decision for your mortgage with so many different mortgage rules. The mortgage rules become more complex if they change once in a while.

Therefore, an overview of the mortgage rules in 2019.

Click here to read about the changes to mortgage rules in 2013 that set a new standard.

Maximum Loan-to-Value decreases to 100%

The maximum ratio between the market value of the house and the mortgage (also called LtV) decreases from 101% to 100% with effect from 1 January 2018. Therefore, the maximum mortgage will be equal to the market value of the home.

Maximum mortgage (Loan-to-Income) increases for two-income households

Lenders have decided that borrowing capacity could be increased due to the decreasing interest rates and the changes in income tax brackets. As of 1 January 2018, the income of the least earning partner contributes 70% to the determination of the maximum mortgage (Loan-to-Income or LtI). In 2017, the lowest income of two-income households still included for 60%. It may be wise to borrow less than maximum is allowed, so that more money remains available for example to buy furniture, a hobby or a holiday.

You get a higher Loan-to-Income (LtI) if you earn € 33.000 or more gross per year if you buy a home with renewable energy systems or take energy-saving measures with the mortgage in their home. Examples are solar panels, roof insulation or heat pumps.

The maximum extra loan amount is € 9.000.

National Mortgage Guarantee (NHG) in 2019

The coverage of NHG increases to € 290.000 in 2018. More expensive homes are therefore eligible for NHG. For investments in energy-saving facilities, the coverage increases with € 15.900 to € 280.900. This investment needs to be in energy-saving facilities.

Since2018 it is no longer mandatory for a mortgage with NHG to apply for life insurance. So NHG gives you the freedom to decide how to deal with the financial risks of passing away.

Mortgage interest deduction at a decreased tax rate

Box 1 (taxable income from work and home) currently has a four-bracket system, while it will have a two-bracket system in 2019.

The first bracket will have a rate of 40,85%. This bracket applies to income up to approximately € 68.600.
The second bracket will have a rate of 49,00%. This income bracket applies to income of more than € 68.600.

If your income is in the highest bracket, a lower mortgage interest deduction applies – even now. The tax rate for mortgage interest deduction is now being decreased in steps of 0,50% per year.
The tax rate for mortgage interest deduction will decrease in steps of 3% per year from 2020. As a result, it will be equal to the basic rate of 37.05% in 2023.

Decreased notional rental value for owner-occupiers

The tax authorities will return the proceeds from the lower tax rate for the highest incomes to all homeowners by reducing the notional rental value. Most homeowners have to add 0,75% of the WOZ value to their income in box 1. That percentage gradually decreases to 0,60%. The percentage is 0,70% for 2018. Except for the part of the WOZ value above more than € 1,080,000. That addition is 2,35% and stays 2,35%.

Box 3: increased tax exemption for assets

The tax exemption in box 3 is € 30.000 in 2018. The tax exemption in box 3 is increased to € 30.360 in 2019.
If you have a fiscal partner, you claim double the amount. So € 60.000 in 2018.